Sony Forces The Verge to Remove Its Spotify Contract…

sopranostare

Yesterday, we pointed to concerted efforts by Spotify to censor major publications from reporting on its contract with Sony Music Entertainment.  That includes Billboard, the Wall Street Journal, and the New York Times, all of whom frequently cover Spotify but offered virtually zero coverage on one of the most important leaks of the year (and, a document that explicitly details why artists are receiving so little from Spotify).

Now, Spotify is taking its muzzling initiative a step further.

Spotify, along with Sony Music, have now forced the Verge to remove the contract from its original story.  The Verge cited ‘a copyright claim’ as the reason.

verge_copyright

(The ‘new’ Verge article)

 

The story, by Verge journalist Micah Singleton, still contains a comprehensive summary of the contract, though that summary may also be ripped down.

So where’s the contract?  Sadly, we didn’t retain a copy in time, but we’re looking around.  If you have a copy, please send it to [email protected] immediately.  It goes without saying, but your identity will absolutely remain confidential.

 

More as it develops.  Written while listening to Huxley on Songza.

54 Responses

  1. Avatar
    Anonymous

    Too late, the damage is done.

    Nobody will ever trust Spotify again…

    • Avatar
      dfsaf

      you obviously didn’t read the agreement or even the article. it’s sony that’s in the fault….read the article dude before commenting

      • Avatar
        Vail, CO

        I just read the article. Doesn’t say Sony made them take it down anywhere.

        • Avatar
          Anonymous

          “Doesn’t say Sony made them take it down anywhere”

          It really doesn’t matter who sent the takedown notice, either.

          The contract proves that Spotify systematically deceives its artists.

          That’s all we need to know…

          • Avatar
            Ash

            That sounds like the pot calling the kettle black. Only on DMN will you see people defending major record labels over Spotify…

          • Avatar
            Anonymous

            Could you please tell me where I — or anyone else — defended Sony?

            Hm?

            Here’s one of my replies to Paul:

            “Nobody’s defending Sony here, Paul; we all know how the labels work.

            But Daniel Ek took their money and screwed the artists like nobody has screwed them since Colonel Parker.

  2. Avatar
    Anonymous

    Don’t you just love this part of the Verge article…

    “The clause states that gross revenue includes “actual out-of-pocket costs paid to unaffiliated third parties for ad sales commissions (subject to a maximum overall deduction of 15 percent “off the top” of such advertising revenues).” In English, that means that Spotify can keep up to 15 percent of all advertising revenues generated by the ad sales that are handled by third parties hired by the streaming service.

    • Avatar
      Anonymous

      Here’s more about Spotify’s secret 15%:

      “How much money that amounts to depends on a number of factors, including what percentage of Spotify’s ads are sold by third parties, and if it chooses to keep the full 15 percent to itself. Spotify may also use these funds to recoup the commissions it has to pay to the third-party companies it uses to sell its ads.

      But regardless of the amount, it’s money that is not accounted for in Spotify’s gross revenue total, which is split 70/30, with 70 percent going to the labels and publishers and 30 percent to Spotify. Spotify pulled in €98.8 million ($110M) in advertising revenue in 2014. The company has gone to great pains to map out for the public exactly what it pays, in part as a public relations move to try and counter criticisms about what it pays artists. But in that detailed explanation, it never mentions this 15 percent.”

      SOURCE: The Verge

    • Avatar
      Adam

      Sigh. Shows your ignorance of the industry.

      That 15% that you assume Spotify is keeping is actually going the to the third party who brought in the ad sales. It’s a standard rate for this type of deal.

      • Avatar
        Anonymous

        Let’s try once again:

        it’s money that is not accounted for in Spotify’s gross revenue total, which is split 70/30, with 70 percent going to the labels and publishers and 30 percent to Spotify. Spotify pulled in €98.8 million ($110M) in advertising revenue in 2014. The company has gone to great pains to map out for the public exactly what it pays, in part as a public relations move to try and counter criticisms about what it pays artists. But in that detailed explanation, it never mentions this 15 percent.”

        SOURCE: The Verge

        • Avatar
          Anonymous

          I wonder who leaked the document. This is the best news Apple and Tidal could hope for.

          • Avatar
            Anonymous

            …and perfectly timed so it completely destroyed Spotify’s press event…

      • Avatar
        ...And you Can KEEP Trying...

        As Adam said, your focus on – and misinterpretation of – this provision merely shows your ignorance of the industry. The 15% is actually paid the to the third party who brought in the ad sales. It’s a standard rate for this type of deal. You will find it in many, many deals.

        It is NOT money that Spotify is keeping or can keep. It is being recognized as fees that Spotify would have to PAY, to third parties, for ad services. If they don’t pay it, they don’t keep it. They can only reduce gross revenues by “up to” that amount, specifically to cover actual third party fees.

  3. Paul Resnikoff
    Paul Resnikoff

    Just saved the entire Verge article locally, as I’m fearing the entire article will be ripped down on ‘copyright grounds’

  4. Avatar
    Anonymous

    If this is the end of Spotify, we should use the opportunity to rethink the entire streaming concept:

    Is there any way to make it useful for individual artists?

    Or does it only work for labels with large catalogues?

    • Avatar
      shlomo

      thanks sam- you’re apparently smarter than most who thought this contract wouldn’t get removed immediately. with that being said i thought the full contract was 40 plus pages and google docs only has the first 20 pages. correct?

  5. Avatar
    Adam

    Paul – seriously!? Sony forced the take down. The Verge confirmed that. To say it was Spotify is just plain wrong. Learn to fact check.

    • Avatar
      Jody

      Agree, but Paul wouldn’t get any clicks if he replaced “Spotify” with “Sony” in the headline.

      • Paul Resnikoff
        Paul Resnikoff

        Uh, okay. Maybe I need another cup of coffee, but where does it say Sony demanded the removal of the contract?

        • Avatar
          Anonymous

          I haven’t seen it either — but then again, it doesn’t make any difference who sent the actual takedown.

          Spotify has screwed its artists big time, and there’s no way for Ek to weasel himself out of this one.

          • Paul Resnikoff
            Paul Resnikoff

            There’s a valid point being made here. Sony’s lawyers may very well have done the threatening, and they have sent me threatening letters.

          • Avatar
            Anonymous

            Nobody’s defending Sony here, Paul; we all know how the labels work.

            But Daniel Ek took their money and screwed the artists like nobody has screwed them since Colonel Parker.

          • Avatar
            Adam

            “Spotify has screwed it’s artists”!?

            Spotify doesn’t have artists.

            Spotify was desperate to launch in the US and really had zero negotiating power when doing this deal.

          • Avatar
            Anonymous

            “Spotify doesn’t have artists”

            Not for much longer… 🙂

            “Spotify was desperate to launch in the US and really had zero negotiating power when doing this deal.”

            So they took the deal and screwed the artists to no end — deliberately and systematically — while Mr. Ek made his millions (or is it billions now?).

        • Avatar
          Anonymous

          Paul, there’s another reason for the massive self-censorship we see in the media regarding the Spotify contract:

          Several sites are Spotify-partners now — Slate is a good example!

        • Avatar
          Jody

          From Verge: “At the request of the copyright owner, the contract has been removed.”

          Where does it say Spotify?

          In my opinion, you deliberately chose to write the headline the way you did as click-bait for an audience who is fueled by your demonization of Spotify. Let’s assume your sources are correct that Spotify is making phone calls to dissuade others from publishing confidential information. Do you really think Mr. Walker’s team at Sony has no concerns of the information being made public? Do you truly believe that the trepidation is from just one party? It is in the interest of both parties to have confidential information remain confidential. But, to your credit, you’re getting engagement around your article. Kudos for that…

          • Paul Resnikoff
            Paul Resnikoff

            Ugh… something like that. Well, thanks all for bringing that new information to light, I changed the title. Sorry about puncturing your well-inflated theory though.

  6. Avatar
    Sam

    I have tried emailing a link and posting it here. My outgoing mail thinks you’re spam, so blocking it. YOUR site is blocking my post (2 attempts) because of the link I’m guessing.

    • Avatar
      Sam

      I ALMOST grabbed a copy yesterday, but just figured all the reporting sites (ahem) would be smart enough to do that. 😀

      I’ll try using a gmail account to send you the link. It’s a google generated HTML version of the document, from their cache.

    • Avatar
      shlomo

      You’re a hero. This is the full agreement unlike the 20 page link above by Sam

      • Avatar
        shlomo

        let the class action lawsuits begin. can’t wait

  7. Avatar
    DavidB

    Excuse my naivety, but who can claim copyright in a contract agreed between two parties? One party? Both parties? Jointly or severally? Just curious.

    • Avatar
      djg

      Doesn’t sound like a bad question to me so I will try and answer, maybe some other copyright attorney can correct me if I’m wrong

      Any author of an original expression of an idea can claim copyright. In this case there is also a work made for hire question and joint work question.

      Applying these basic rules Sony (the employer of the lawyer who drafted the original) can claim ownership of the original text of the contract. Excluding any public domain boiler plate language.

      If Spotify added non de minimis tex then they can claim that a joint work with Sony was created.

      So either party can claim ownership and demand that the contract be taken down.

      • Avatar
        Sarah

        Good question and good answer.

        I probably would’ve kept this up on a fair use argument …. even though it included the entire work. Newsworthy and public benefit arguments, obviously not competing with the original in the market, etc.

        The only case I know of that directly addresses copyright infringement of a contract involved a competitor – one insurance company copied key, unique provisions of another insurance co’s policy, that the creator reasonably felt provided it with a competitive advantage in the relevant market (AFLAC vs Assurant). So I don’t think there is much case law exactly on point and the facts are materially different here (news vs. direct competition for customers), leaving a judge free to easily find fair use in this instance. Not a guaranteed slam dunk (a fair use argument rarely, if ever, is) but reasonably strong, especially in the context of the article.

        Though it’s not purely legal reasons that inspired the Verge to remove it, I’m sure. They likely assumed that, by the time they agreed to take it down, multiple people had already saved copies – they did their “duty” by putting it out there in the first instance, and there’s insufficient benefit from keeping it up to justify the additional risk of legal action or creating hostile relationships.

        • Avatar
          Myles

          “They likely assumed that, by the time they agreed to take it down, multiple people had already saved copies”

          Hah! Is that another dig at Paul because he’s getting beat up here in the comment section

  8. Avatar
    Ash

    “Sony Music is likely getting considerable payouts from Spotify each year, but what it does when it gets that money — and how much of those payments actually make it down to the artists — is still unknown. ”

    “Some artists have clauses in their contracts to get a larger share of the streaming revenue, and some artists are still operating under CD-era contracts that only give them 15–20 percent of their streaming revenues.”

    “In the wake of Swift’s departure from Spotify, many musicians rallied to her cause, vilifying streaming services that paid a fraction of a penny per play. But this contract makes it clear — the pay per stream rates aren’t the only issue. According to its financial disclosures, the majority of Spotify’s revenue, around 80 percent, has been flowing out the door to the rights holders. “You can’t squeeze blood from a stone,” said David Pakman, the former CEO of eMusic and partner at Venrock. “Your beef can’t be with Spotify anymore.” At least not with Spotify alone.

    Sony Music and Spotify declined to comment.”

    Those are several important quotes from the end of the article that were not even mentioned in this DMN story. Honestly, although I regularly check this site, it’s stories like this that are exceedingly misleading and do not even provide a link to the source material (which is not only insulting to The Verge and other news outlets that have actually DONE the research) and allows for a retelling of a story to fit a particular agenda, in this case, trashing streaming.

    Everyone here is damning Spotify but if you actually READ The Verge article, you see that other than the 15% advertising revenue that isn’t counted in Spotify’s gross, they pay out a ridiculous amount straight to Sony – none if which is guaranteed to be seen by any of the artists. Sure, this isn’t the 90s where it was hard NOT to make money, but it sure seems like there’s enough money going around that artists should be getting paid more than they are.

    I feel like you are all missing the point of the streaming debate. Everyone is so focused on payout rates and free listening and all of that while completely ignoring the fact that the major labels have muscled their way into owning a stake of said companies and have guaranteed advances with ridiculous terms that give them an unfair advantage over everyone else, and do not require them to pay anything worthwhile to their artists. When Spotify says they pay out as much money as they do to music rights holders, I believe them. It just so happens that the major labels own the masters (and in most cases, a good portion of the publishing, too) and you couple that with individual artist contracts and it’s no wonder songwriters and artists aren’t making more than a couple hundred or thousand dollars on hundreds of thousands and millions of streams.

    No, streaming is not as lucrative as downloads. But, to try to vilify Spotify as the reason no one is making any money is so incredibly short-sighted and arrogant. Articles like this that probably didn’t take more than 10 minutes to write are clearly the reason why DMN’s reputation isn’t too high up there on the journalistic integrity ladder. I think there are certainly good writers here, like Ari, who genuinely care about the music business and put a lot of thought into their articles, but it’s very disappointing to read posts like this that make 0 effort and only push an agenda.

    As for the commentators on this article, and on this site as a whole: you clearly are living in some delusional, dream world thinking defeating streaming will solve any sort of problem, that eliminating the free tier will encourage more people get more money. Clearly, you aren’t part of the younger generation and have no idea how they listen to music, find music, and think about music. It’s the 21st century. Make peace with your on nostalgic idea of what the music industry once was and either move on and try to adapt or retire and continue yelling at the kids to get off your lawn. It doesn’t really matter to us.

    • Avatar
      Me2

      Now that the labels have muscled their way in, we can’t expect an environment that is equitable to all players, despite companies who would like to position their image otherwise.

      • Avatar
        Anonymous

        Tidal got a bad start, but they couldn’t ask for a better opportunity than this (goes for new services like RepX, too).

        A lot of artists will want to bypass labels and avoid scammers like Spotify after this.

        • Avatar
          Sarah

          Thanks for the mention… busy lately preparing for our upcoming beta launch. It seems that there’s going to be tons of competition in the near future – I’ve even spoken to several label owners who are also trying to get into it with their own platforms – so the next 12 months should be exciting times.

          With all of the activity in this space, I’m quite confident that (no matter who it comes from) you’ll start having better, more sustainable options for streaming over the next year or two – and that’s a wonderful thing for everyone. 🙂

          • Avatar
            Anonymous

            “better, more sustainable options for streaming over the next year or two”

            I like that word.

            —–Keeping my fingers crossed for you guys—–

    • Avatar
      Jon

      I agree that Spotify’s obligations aren’t to the artists but to the SRCOs, and it wouldn’t be surprising to see that a lot of artists’ deals with majors leave most streaming revenue in the latter’s hands. But there is a world of artists and songwriters outside of those deals who are getting 100% of the royalties due, and the putative streaming success stories from that world look pretty unconvincing to me, where they exist at all. Those royalties are still tiny. On the songwriter/publisher side, they’re absolutely pitiful.

    • Avatar
      quake

      Paul has his own sources you know You should know his favorite line “Several inside sources informed DMN….” Haha this is is a big joke,

  9. Avatar
    tcooke

    All artists need to know this, but keep the message simple. Sony and all majors are fucking you. Spotify and 99.99% likely Apple will (with their deals), are fucking you behind your back so fucking hard. Keep it simple. Try and get the message out there, but keep the message simple, none of this 15% ad revenue 3rd party stuff. I hope you all understand why. It’s not because artists are simple, it’s because the bottomline of this needs to it get out there, sink in, and instigate change. Are there really any true artists out there today? Show me. Again, spread the message. Keep it simple.

  10. Avatar
    Fair User

    Paul,

    I saved a copy. Do you still need it?